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Industry experts warn of ripple effects from Yantian COVID-19 outbreak

Industry experts warn of ripple effects from Yantian COVID-19 outbreak
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Industry experts are warning of ripple affects across the global supply chain as the Port of Yantian continues to struggle with a COVID-19 outbreak which has led to a severe shortage of workers.

An outbreak of COVID-19 at the fourth largest port in the world and major gateway for Chinese exports is the latest crisis to hit the maritime industry and global supply chain, following the congestion on the US West Coast and obstruction of the Suez Canal.

Labour shortages have forced vessels to stay at berth for several days and pushed yards to maximum capacity. Carriers have started to divert services to other Chinese ports, such as Hong Kong, which has led to further pressures along the coast.

The ripple effects

Lars Jensen, CEO & Partner, Vespucci Maritime, told PTI that carriers already “drastically ramping up the number of services” which will omit the Port of Yantian over the coming four weeks.

Jensen warned of “ripple effects” along the supply chain and possible backlog of cargo that other ports, such as Shekou and Nansha, might not be able to fully absorb.

A.P. Moller-Maersk said on the 7 June 2021 that the situation at Yantian “continues to deteriorate” and that yard density “remains elevated with disinfection and quarantine measures being continuously implemented” by local authorities.

Meanwhile, Hapag-Lloyd has announced a flurry of its Transpacific services which will omit stops at Yantian in order to “minimise vessel idle time and port congestion”.

“The carriers really do not have much choice but to have a large amount of omitted calls in Yantian – otherwise their vessels will be tied up in a long queue and hence the impact will spread to all the other ports on the services as well,” Jensen said.

“Once the port reverts to normal operations this could then cause a surge of cargo with the magnitude depending on how large the backlog has become.”

Jensen suggested that a substantial export surge will result in container build-up at destination ports with a time lag of 2-5 weeks depending on destination.

This could lead to yet more congestion at major US West Coast gateways, which have been under severe pressure since the middle of 2020 when lockdown measures were lifted in China and exports resumed.

Speaking during a webinar on 8 June 2021, Eleanor Hadland, Drewry Shipping Consultants, also warned of a possible “spill over” into North America and Europe, saying the industry has very little spare capacity to cope with disruption.

Digital drives solutions to crises  

Effective use of digital technologies is the only way to stop events like the congestion at the Port Yantian turning into a maritime and supply chain crisis in Europe and North America.

Speaking to PTI, Wolfgang Lehmacher, Anchor Group, said the situation is quickly affecting other ports and combined with container imbalances on the US West Coast it will put “another strain on scheduling and overall synchronisation along maritime supply chains”.

“Avoiding ripple effects requires large scale digitisation to raise visibility along the chains. Intelligence around nodes and flows will be critical with ever growing volumes,” Lehmacher said.

Lehmacher said this crisis once again emphasises the importance of what he calls the “soft side of the equation”, which includes “digital connectivity, analytics and smart talent”.

However, Lehmacher also insists that China is “well placed to take up the challenge” brought about by today’s “complex global supply chain network of regional and local networks”.

Mikael Lind, Professor in Maritime Informatics, Chalmers University of Technology and Research Institutes of Sweden (RISE) suggested the only long-term solution is digitalisation, which can “give us back control over the situation”.

“Data about the flows and the individual situations at certain ports is vital,” Lind told PTI. For the supply chain to be better prepared, trade flows need to be “better coordinated to ensure the best utilisation of assets”.

“This information is necessary to optimise ship journeys at optimal energy efficiency and synchronise arrivals and departures with hinterland transport.”

Lind called for an introduction of “slot management on a global scale” which will allow infrastructure providers and co-users to virtually coordinate their operations.

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